U.S. takes Airbus dispute to WTO

WASHINGTON (CNN) -- The Bush administration announced Monday it is proceeding with a trade case against the European Union for allegedly providing illegal subsidies to aircraft maker Airbus, the major competitor to U.S.-based Boeing.

U.S. Trade Representative Rob Portman said the United States would take its case before the World Trade Organization because EU member states were going ahead with $1.7 billion in new subsidies to Airbus, after the failure of a negotiated settlement.

"The EU's insistence on moving forward with new launch aid is forcing our hand," said Portman in a statement.

The case centers around whether the world's two largest aircraft makers are receiving unfair support from their governments. In January, both sides agreed to put aside their WTO cases for 90 days and work towards a negotiated settlement, but the period lapsed without an agreement.

Despite the announcement, Portman said he believed there was still hope for avoiding the WTO case.

"We still believe that a bilateral, negotiated solution is possible," he said, adding, "but the negotiations won't succeed unless the EU recommits to ending subsidies."

At the same time, Portman and the EU Trade Commissioner Peter Mandelson released a joint statement expressing unity.

"We remain united in our determination that this dispute shall not affect our cooperation on wider bilateral and multilateral trade issues," they said. "We have worked together well so far, and intend to continue to do so."

USTR spokesman Richard Mills said the process would begin Tuesday when the U.S. will ask the WTO to establish a dispute-settlement panel.

Mills said precedent showed a settlement was possible.

"We're [the] only country to file a WTO case brought against China. We got it resolved before we even formed a panel," Mills said.

Mills said such cases happen all the time, but this one is unusual because of "the size of the case, the players involved, and the media interest."

"This is about us making sure Boeing has a level playing field, and not just Boeing but the hundreds of suppliers that are part of their stream," Mills said.